Correlation Between RBC Bearings and Office Properties

Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Office Properties at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining RBC Bearings and Office Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RBC Bearings Incorporated and Office Properties Income, you can compare the effects of market volatilities on RBC Bearings and Office Properties and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in RBC Bearings with a short position of Office Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Office Properties.

Diversification Opportunities for RBC Bearings and Office Properties

-0.35

Correlation Coefficient

RBC Bearings  Office Properties

Very good diversification

The 3 months correlation between RBC and Office is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Office Properties Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Office Properties Income and RBC Bearings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on RBC Bearings Incorporated are associated (or correlated) with Office Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Office Properties Income has no effect on the direction of RBC Bearings i.e., RBC Bearings and Office Properties go up and down completely randomly.

Pair Corralation between RBC Bearings and Office Properties

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to generate 0.61 times more return on investment than Office Properties. However, RBC Bearings Incorporated is 1.63 times less risky than Office Properties. It trades about 0.05 of its potential returns per unit of risk. Office Properties Income is currently generating about -0.11 per unit of risk. If you would invest  32,049  in RBC Bearings Incorporated on December 17, 2024 and sell it today you would earn a total of  1,599  from holding RBC Bearings Incorporated or generate 4.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

RBC Bearings Incorporated  vs.  Office Properties Income

RBC Bearings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, RBC Bearings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Office Properties Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Office Properties Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with RBC Bearings and Office Properties

The main advantage of trading using opposite RBC Bearings and Office Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Office Properties can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Office Properties will offset losses from the drop in Office Properties' long position.

The idea behind RBC Bearings Incorporated and Office Properties Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.